Senate panel approves 75-cent cigarette tax hike

Turning to an old standby, Democrats in the Illinois Senate Wednesday floated a plan to nearly double the state’s cigarette tax and use the money to pay for construction projects.

Doug Finke

Turning to an old standby, Democrats in the Illinois Senate Wednesday floated a plan to nearly double the state’s cigarette tax and use the money to pay for construction projects.

Meanwhile, a key budget negotiator for the Senate Democrats said his caucus is crafting its own full-year budget that they hope to pass by the end of the week and send to the House. Even some Democrats said the proposed spending plan is unrealistic, though, since it is balanced using revenue from a massive expansion of gambling that is stalled in the House.

On a partisan vote, the Senate Revenue Committee approved House Bill 556, which will increase the state tax on cigarettes by 75 cents per pack. The tax is currently 98 cents per pack.

Sponsoring Sen. John Cullerton, D-Chicago, said the higher tax will generate an additional $328 million, with the money to be used to pay off bonds issued to finance capital projects such as road and school construction. He said a $4 billion bond program could be financed with the tax increase.

“There is a great need for various types of (new) revenue,” Cullerton said. “This is the easiest one to support.”

Rep. Bill Brady, R-Bloomington, said he was skeptical of the revenue estimates since higher cigarette taxes prompt more people to quit smoking. He also noted that the estimates do not take into account the effects of the statewide indoor smoking ban signed by Blagojevich Monday. That could further cut into cigarette sales, he said.

“President Jones is behind it,” said Sen. Terry Link, D-Waukegan, a member of Jones’ leadership team. “He wants it moved, and he wants it passed.”

Asked why Jones has had a change of heart, Link said, “It’s July 25th, and there’s a lot of change of hearts around here.”

The General Assembly on Tuesday set a record for an overtime legislative session, and a temporary budget to fund state operations expires at the end of the month.

By earmarking the money for capital projects, Cullerton hopes to win support for the tax hike from Republican lawmakers. Republicans in both the Senate and the House have said one of their top priorities is to pass a state construction bond program this year.

Senate Minority Leader Frank Watson, R-Greenville, said he doesn’t think there’s support in his caucus for the cigarette tax hike, “but people can do what they have to do and they’ve got their districts to represent.”

Democrats have enough strength in the Senate for the three-fifths’ majority needed to pass the hike without Republican votes. That’s not the case in the House, where GOP votes are required because the tax hike would go into effect Sept. 1.

A spokesman for House Minority Leader Tom Cross, R-Oswego, declined to comment until the Senate votes on the bill.

House Speaker Michael Madigan, D-Chicago, said in a radio interview last week that he supports a cigarette tax increase to pay for expanded health-care programs. He would not say Wednesday if he supports the hike with the money earmarked for construction projects.

Blagojevich spokeswoman Rebecca Rausch said the governor supports it, despite his pledge to veto any sales or income tax increase.

“We are willing to support that as a way of generating revenue to support our priorities,” she said. “It is not a general sales tax increase. It is not a general income tax increase.”

Illinois now ranks 27th among the 50 states in cigarette taxes, according to the Campaign for Tobacco-Free Kids. If the 75-cent tax hike is approved by the House and Senate and signed into law, Illinois’ tax would be $1.73 per pack, ranking the state 11th highest.

The cigarette tax hike would be part of an overall spending plan being put together by Senate Democrats.

“Something will be done before the end of the week,” pledged Sen. Donne Trotter, D-Chicago, a key budget negotiator for the Democrats. “It will be a balanced budget based on revenue streams that have already been passed or will be passed.”

That includes more than $2 billion from a massive expansion of gambling in Illinois. The Senate approved the expansion — which adds new casinos and allows existing casinos to expand — but the House has not taken up the bill.

Madigan has said he doesn’t think the House will pass an expansion bill that includes new casinos.

Trotter said the Senate Democrats’ plan will increase school spending by $900 million, fully fund pensions and pay raises and provide additional money for Medicaid payments.

However, even some Democrats said the plan will not resolve the budget impasse. Sen. Marin Sandoval, D-Chicago, called it “posturing.”

“I don’t think further posturing is what the people of Illinois deserve today,” Sandoval said. “They’re looking for a budget that is a compromise in both chambers. I haven’t seen any budget today that is a compromise.”